Dollar plunges as markets reposition after US inflation expectation change

The dollar plunged overnight after U.S. consumer prices were unchanged in July compared with June, when prices rose a monthly 1.3%. The July result was lower than expectations due to a sharp drop in the cost of petrol, causing markets to reposition on hopes that inflation was peaking.

The European common currency was trading at $1.0285, with its 0.14% loss on the day, though it came after a 0.84% jump on Wednesday – its biggest daily percentage gain since mid-June.

Sterling jumped against the dollar after lower-than-expected U.S. inflation print for July dampened expectations for a 75 basis-point Federal Reserve rate hike in September.

The Ugandan shilling firmed on Wednesday on the back of ebbing appetite for hard currency from commercial banks and importers.

Market Outlook: The shilling is forecast to remain stable against the dollar.

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